A wakeup call can seem like quite a jolt when it happens, but, usually, we are grateful for it. And even if we didn’t ask for a wakeup call, it can still prove fortuitous. Maybe this will be the case for some of you when you read this.

If you are a long-term holder of physical gold for the right reason, i.e., ‘gold is real money’, and you understand that gold is not an investment, and you are not currently speculating/trading gold with short-term objectives for higher prices, then this could be a benign event for you.

If, on the other hand, you are an ‘investor’, trader, or speculator with expectations for higher gold prices; if you are a long-term investor who is overcommitment to gold financially and emotionally; if you are still waiting for the impending ‘moonshot’ that will bring you wealth untold; if you would like to spare yourself some unnecessary remorse; then you might want to continue reading.

After recently perusing some gold charts for some historical perspective, I was relatively nonplussed; but continued my search. When what to my wondering eyes should appear…

source

The above chart is a 5-year history of gold prices (inflation-adjusted) from August 2013 to August 2018. As you can see, it is not a pretty picture.

Below is the same chart without the inflation adjustment…

After looking at both charts, there are a couple of differences that are apparent:

1) the overall result of the price action for the entire period is a loss of slightly more than three hundred dollars per ounce on an inflation-adjusted basis; the second chart’s nominal amount is less than two hundred dollars per ounce

2) a break below $1200.00 per ounce would be a clear violation of the pattern of successively higher lows since December 2015 when viewing the inflation-adjusted chart; the pattern remains intact on the second chart even if gold were to break below $1200.00 and go a bit lower

What is clear on either chart is that gold has broken below a line of support dating back to its price-point low in December 2015. Maybe just as important, the price of gold has been held below a declining line of overhead resistance going back five full years…